voting-guidelines.md

SIDAN Lab - DRep Voting Guidelines

With the adoption of Voltaire, we have created acertain guidelines and directives that will help us make our decision regarding governance actions as a dRep at the Cardano Ecosystem. This is NOT a document aimed at becoming a large set of strict rules for the whole community through social contract and to dictate how they make their decisions. It simply contains some guidelines we thought are important and we abide by them to the extent that it’s possible. Meaning, it’s a subjective assessment which we use and participants of Cardano's governance and its partner chains are free to adopt in order to make their own decisions.

Evolution of this document is visible on Github. This document is always subject to change.

This document is open source so anyone is free to used it in any way they deem necessary, Find the license on: https://github.com/sidan-lab/DRep/blob/main/LICENSE

The bullet points are not ordered by importance. These items are numbered only to facilitate search when it’s quoted in the future.

OPERATION DIRECTIVES

1. We maintain most discussion regarding active proposals public and we try to keep it that way. But we are very open to private communications whenever the case requires it.

2. In some cases, we approach the proposer(s) to ask for clarifications. We maintain this approach for delicate topics or smaller clarifications regarding a concrete topic. We are also open to invitations to discussions within private channels that seek to develop proposals or explain proposals.

3. We are open to pre-publication feedback. So, if proposers get in touch with us before their referenda and ask us for feedback before a proposal becomes public, we usually accept it and provide feedback regarding the proposal. We reserve the right to engage or deny engagement with proposers based on our own criteria and based on own previous experience, however.

4. We never become authors of referenda unless we form part of it either as proposer, curator or beneficiary of the proposal.

5. Our experience has shown us that private information, pseudo-confidential or privileged information usually contain insignificant weight and it’s often misleading so public discourse is a must for our operations. In consequence, we have never signed NDAs or confidentiality agreements of any kind. So, our push will always favor open communication.

Principles on Treasury Proposals at CardanoGov

GA - Treasury Withdrawals

Efficiency: Proposals should demonstrate the ability to use resources wisely and achieve significant impact with minimal waste. Efficiency ensures that treasury funds are allocated to projects that maximize value for the ecosystem.

Strategic Vision: Proposals must align with the long-term goals of Cardano. We support initiatives that foster decentralization, innovation, and sustainable growth, with a clear vision of how they will contribute to the future of the ecosystem.

Participation: Active engagement with the Cardano community is essential. Proposals should encourage open collaboration and seek input from a wide range of stakeholders to reflect the diverse needs of the ecosystem.

Accountability: Proposers are expected to fulfill accountability for the funds they receive. Clear milestones, deliverables, and regular reporting should be outlined to ensure that treasury support leads to measurable results.

Responsibilities: Proposals must outline how the proposers intend to uphold their responsibilities to the Cardano community. This includes acting in the ecosystem’s best interest and ensuring the integrity of the project’s goals.

Transparency: Transparency is critical in gaining community trust. Proposers must provide detailed and open explanations of their plans, progress, and use of funds, making this information accessible to all community members.

1. On-Chain Identity Verification Requirement: Proposers should verify their on-chain identities whenever possible. For proposers who may not publicly disclose their identity but have a reputable presence, they should provide alternative forms of proof, such as evidence of participation in offline events or activities that demonstrate their presence as a real individual. These measures ensure that their identity is tied to a real-life person who cannot be easily impersonated. Rationale: A lack of verified identification makes it difficult for the community to assess the legitimacy of a proposal, especially for those unfamiliar with the proposing team. This also increases the risk of malicious actors impersonating reputable individuals, potentially undermining trust and harming future governance processes.

2. Timely and Honest Engagement with Community Discussion Requirement: There must be an active and open discussion of the project before the voting begins. Proposers should engage with the community early, providing sufficient time for feedback and discussion. All significant community questions, concerns, or doubts should be addressed, or at least an honest attempt should be made to do so, prior to the start of the referendum. Rationale: Proper socialization of a proposal before voting ensures that the community has sufficient time to understand and evaluate the project. By addressing questions and concerns beforehand, the proposer demonstrates transparency and accountability, which builds trust and reduces the likelihood of misunderstandings or unresolved issues during the voting period.

3. Minimal Changes After Proposal Launch Requirement: Once a referendum begins, any significant changes to the proposal's content should be minimized. The proposer is responsible for presenting a well-explained and complete referendum before the voting period starts. Rationale: Making substantial changes to a proposal after voting has started can cause confusion, create doubt, and increase the risk of misinterpretation. Voters need to base their decisions on the information provided at the outset, and frequent changes may reduce the integrity and trustworthiness of the process. By ensuring the proposal is fully developed and clear from the start, the governance process remains transparent, efficient, and accountable to the community.

4. Proof of Funds Usage Requirement: Proposers must provide proof of how funds will be or have been spent, whenever applicable. This can include receipts, documents, invoices, and transaction records. These documents serve as evidence of where and how funds are being allocated in the budget. Expenditures without detailed proof are acceptable only when they pertain to minor items, but such expenses should be minimized and must not involve critical aspects of the proposal. Rationale: Providing clear documentation of expenditures ensures accountability and transparency in the use of treasury funds. It allows the community to verify that the funds are being spent appropriately and prevents potential misuse. Major budget items, such as venue costs for a conference, must be accompanied by evidence to ensure the integrity of the proposal. This helps to ensure that funds are used efficiently and builds trust in the governance process.

5. Milestone-Based Approach Requirement: Proposals seeking treasury support should adopt a milestone-based approach to funding. Projects should begin with smaller funding requests, demonstrate successful delivery, and then scale to larger requests based on proven outcomes. Each proposal must include a clear start and delivery date, or provide a reasonable explanation if specific dates cannot be set (e.g., bounties or ongoing tasks). A structured schedule is essential to track progress and maintain transparency. Rationale: This funding model ensures that treasury resources are used efficiently, with project teams proving their capability and delivering results before seeking further financial support. This builds accountability, as proposers must meet milestones before additional funds are granted. Clear timelines or valid exceptions help the community track progress, ensuring transparency and minimizing risk in the allocation of treasury funds.

6. Evaluating Financial Stability in Treasury Funding Decisions Requirement: Proposals must include a clear path toward economic self-sufficiency, such as generating their own profits, securing sponsorships, or raising external funds. Over time, projects should aim to become financially independent from the treasury and should not rely on perpetual funding to sustain operations. Proposals from projects facing financial difficulties, such as bankruptcy or economic hardship, must be thoroughly evaluated, as they are likely to require continuous treasury support. In these cases, the project's importance to the Cardano ecosystem should be the primary factor in deciding whether to grant funding. Rationale: Encouraging economic self-sufficiency promotes accountability and ensures that treasury resources are used efficiently, preventing long-term dependency on the treasury. For projects in financial distress, additional scrutiny is necessary, as they may require ongoing funding. In such cases, the value of the project to the Cardano ecosystem should be the key factor in deciding whether to provide treasury support.

7. Encouraging Open-Source Solutions Requirement: Treasury funds should primarily support projects that are open-source, allowing the community to access, verify, and benefit from their outcomes. However, in cases where full open-sourcing is not feasible, such as protecting sensitive business logic or proprietary information, proposers must provide a clear rationale explaining why closed-source elements are necessary. Each case of closed sourcing will be reviewed individually, and the justification must demonstrate that it aligns with the community's best interests. Rationale: The treasury funding is to promote open collaboration and foster growth within the Cardano ecosystem, ensuring that funded projects provide tangible benefits to the broader community. However, there are valid cases where business logic, proprietary methods, or critical data structures should remain protected to safeguard the competitiveness of the proposer’s business.

8. Focusing Treasury Funds on Cardano Ecosystem Growth Requirement: The primary purpose of the treasury is to support the growth and success of the Cardano ecosystem. This can be achieved through various means, including application and software development, hardware development, community-building events, liquidity provisioning, grants, bug fixing, or bounties for work related to Cardano projects. All proposals seeking treasury funding must have a direct and substantial connection to the Cardano ecosystem. Funding requests for geopolitical or economic events outside the ecosystem should be strongly discouraged, as they do not directly contribute to the growth or sustainability of Cardano. Rationale: Treasury resources are limited and should be used to maximize their impact within the Cardano ecosystem. By focusing funding on projects that directly contribute to the ecosystem’s development—whether through technology, community, or infrastructure—the treasury helps ensure long-term growth and sustainability. Proposals unrelated to the ecosystem, such as those focused on external geopolitical or economic events, divert resources away from Cardano’s primary mission and dilute the treasury’s effectiveness in fostering ecosystem success. Therefore, such requests should be discouraged to maintain a clear focus on ecosystem-centric initiatives

9. Ensuring Transparency: Public Reporting of Proposal Results Requirement: Proposers must post a final report detailing the outcomes of their project on public platforms, such as Twitter, to allow the community to review the progress and results. Regular updates through social media and other public channels are strongly encouraged to maintain ongoing transparency. The emphasis should be on keeping the community informed throughout the project's lifecycle, with a particular focus on how the funds were used and the impact achieved. Rationale: Transparent communication is critical for building trust within the community and ensuring accountability for treasury-funded projects. By providing regular updates and a comprehensive final report, proposers demonstrate responsible use of funds and allow the community to assess the project's success. Prioritizing reporting over proposal creation ensures that the focus remains on delivering measurable results and maintaining open dialogue with stakeholders, ultimately fostering a more informed and engaged ecosystem.

10. Mitigating Risks in Third-Party Funding Requirement: Requests for treasury funds on behalf of a third party increase the risk of non-delivery or misuse of funds. Therefore, proposals that request third-party funding must undergo additional diligence and auditing. The requester must provide solid proof of delivery and demonstrate a strong reputation. This can include proof of payment to a known address, web2/web3 links verifying the transaction, or a public acknowledgment from the third party confirming receipt of funds. Direct funding requests from individuals, companies, foundations, DAOs, or autonomous AIs, without intermediaries, should be prioritized. Proposals involving intermediaries, such as PR or marketing agencies that take a portion of the funds, should be discouraged. Rationale: Funding third-party entities introduces greater risks, such as potential non-delivery or malicious intent, making it essential to impose higher standards of proof and scrutiny. Providing clear evidence of fund delivery and ensuring the requester has a strong reputation mitigates these risks. Additionally, prioritizing direct funding to native ecosystem participants who have a vested interest in Cardano’s success ensures that funds are allocated responsibly and aligned with the ecosystem's growth. Intermediary-driven proposals may overwhelm the governance process with projects unconnected to Cardano, diluting the treasury's purpose and ultimately harming the ecosystem.

11. Proposer Accountability in Governance Discussions Requirement: Proposers must make a sincere effort to engage with all meaningful questions and feedback from governance participants, particularly when important points are raised. Proposers should maintain an open, respectful dialogue and not act as though their reputation exempts them from engaging with the community. Ignoring comments, disregarding feedback, or refusing to interact with governance forums and participants should be considered a red flag. Rationale: Active and respectful engagement with the community is essential for building trust and ensuring transparency in the governance process. When proposers take the time to address questions and concerns, they demonstrate accountability and openness to feedback, which strengthens the community’s confidence in their proposals. Conversely, ignoring or avoiding interaction raises doubts about the proposer’s intentions and commitment to the community, undermining the collaborative spirit of governance and signaling potential issues with the proposal.

12. Avoid Funding Memecoins and Airdrops Requirement: The treasury must not be used to fund the liquidity of memecoins, pump-and-dump schemes, or airdrops. These activities carry significant risks for users, as they can expose them to scams, malware, or intentional financial losses. Such proposals should be strictly avoided to safeguard the integrity of the Cardano ecosystem. Rationale: Funding risky activities like memecoins, pump-and-dumps, or airdrops can have serious consequences for users, leading to potential scams and financial harm. In addition, supporting these types of projects would damage the reputation of the Cardano ecosystem and its associated entities. To maintain the trust and confidence of the community and external stakeholders, the treasury should focus on supporting projects that contribute positively to the ecosystem’s growth and long-term sustainability.

13. Contingency Planning for Unexpected Incidents Requirement: Proposers must include a contingency plan in their proposal, outlining steps they will take in the event of unforeseen circumstances that prevent the project from continuing as planned. This plan should detail how the team will address disruptions, whether by adjusting the project’s scope, reallocating funds, or issuing refunds to the treasury. Rationale: Unexpected challenges such as market changes, team issues, or technological barriers may affect a project's progress. A clear contingency plan ensures accountability and transparency, allowing the community to understand how the proposer plans to mitigate risks. It also ensures that treasury funds are protected and managed responsibly in case the project cannot proceed as originally intended.

These Guidelines are adapted/adopted from Saxemberg Treasury Guidelines https://saxemberg.com/guidelines/.